Mike: Today's guest on Around The Coin is Willie Pang the CEO of Limepay. Limepay has raised over 30 million to help merchants, retailers, businesses offer buy now, pay later solutions. So when you go to a website and you wanna buy a pair of jeans, they're the ones that allow you to spread that payment out over time instead of paying it all at once using a credit card.

We talked about the buy now pay later industry. We talked about how Limepay got its start, and then we also talked about the intersection of advertising. And e-commerce and what the future may look like using cryptocurrency technology in buy now pay later. We discussed briefly on the influences that social media apps like TikTok have in a geopolitical sense, and then wrapped up with our real take on the influences of the global economy.

Hope you enjoy this dynamic, wide ranging conversation. Here is Willie Pang.

Mike: All right, Willie I'm excited to chat with you, man. Maybe we'll kick it off with a bit about what you're working on. So with Limepay just give me the, the quick story on how it began and maybe what, what led up to it and, and what you guys are doing.  

Willie: Great. And, and Mike, thank you so much for having me. It's, it's an incredible privilege. I, I think for, for us at Limepay, I mean, our business is really only two or three years young and started in 2018 essentially as a, you know, I think as, as a, as a combo buy now pay later slash payments company. And it's, it's really, I mean, it's, it's amazing how quickly the ecosystem has changed and you, you will, I think listeners around the world will, will remember that you know, well as Aussies we are a Sydney domicile.

We'd love to state claim on, you know, the after pays of the world. Having so sort of brought B NPL to the masses all around the world. And we were, you know, we, we were looking at that model way back then and, and thinking to ourselves, Hey, you know what we think. The prop position of a brand or a merchant getting to the end of a very expensive customer experience, our design of a customer experience to sell a product, and then sending, you know, Mike Townsend out to a third party marketplace and losing customer ownership.

We thought that the model was broken. And so we created, we created Limepay essentially as a white label solution so that merchants at checkout could own the customer all the way through to the end of that purchase journey from a buy now pay later, or what we, what we now call paying installments capability.

And that was really the genesis of the business. And it's been, it's been really interesting journey because over a time, and we can see now, and I guess we'll talk about this more, Mike, is. Consumer finance or B2B finances changes, embedded finance experiences and the way banks are kind of thinking about playing in this ecosystem.

As all of that has changed, we too have changed what we do and how we, how we play. And so I guess we can unpack that in a little, in a little bit more detail.  

Mike: Yeah. So why it seemed like there was a lot of entrance in the market. So basically it's like you get to check out and instead of paying with your credit card, this concept by now pay later, allows people to split that payment up over, you know, months, maybe six months or a year, multiple years.

But it's like instead of buying a, a couch for a thousand dollars, you pay $10 a month for. 12 months. So you pay a little more but you get the benefit that you don't have to pay it all upfront and then money is made on the interest or the, the difference between what it would cost now versus over time.

Did this kind of like industry pop up, was the opportunity there from what you saw because of some technological or regulatory or cultural condition? Cuz it seems like there's, That was when this kind of became popular.  

Willie: Yeah, it's a, it's a, it's a great question. I mean, it's, it's probably a combination of all of those things that you've just described as it is in almost every sophisticated money market around the world.

It started in sort of unregulated lending. So, so that, and that's why the, the, the pain for, or the buy now pay later is mostly in jurisdictions limited to you know, sort of 60 days or in here in Australia it's a maximum of 62 days on the, on the repayment. And so therefore you get to kind of the four equal installments or eight installments or whatever it happens to be, but it tends to be within that space and really created a new way for consumers.

Cuz paying in installments, quite frankly, has existed since the fifties, right? From when when MasterCard and Visa and the banks and Bank of America as an example started this stuff. So it's actually fundamentally been around for a long time, but, and in allowing particularly younger CU consumers and customer cohorts to download a app in a very digital experience that looked like it was mostly free.

And then to be able to use that credit that they had to deploy in on their favorite eCommerce websites. I mean, that was, that was just pure genius. Right? And and who doesn't like free money? I mean, the proposition, and this is Mike. We we're big believers. In fact, I think most people, particularly we tell banks around the world are big believers in the opportunity.

If you look at. What FIS slash Worldpay are forecasting for total installments. I mean, globally, it's sort of just north of a hundred billion right now, by 2025 might be a little bit longer than that. By 2026 it'll be over a trillion. So there's,  

Mike: So wait, what is that, That's a, that, what does that number represent? The amount of money total, total in the world.  

Willie: Total transactions that will be that will be paying installments. So it'll be over a trillion. So there's orders of magnitude growth opportunity in just the next short three years.  

Mike: Interesting. And what, what's the genius part about this? Is it, Yeah,  

Willie: I think the, as a consumer proposition it's a, it's a total winner. It's a total winner because you and I, you know, if you can, if you can, you know, I think my, our fundamental view on it is responsible lending is important regulation in this. Part of the sector is important and it will happen. And you can see it in the states and in the UK and in Australia and so forth.

There's, there's no, there's no getting around that. We actually think it's a good thing because what we also have seen in the sector is everyone's chasing after that trillion dollars. That doesn't mean you should be giving credit to everyone and anyone. And by now, pay later or paying in installments is a wonderful cash flow management tool.

The operative word being management. If you know how to manage it, then it's very useful. If it's not, then you've got seven apps on your phone and you're kind of just cycling, you know, those old credit revolving. It's basically revolving, Right. But as, but as a core proposition to help either consumers or businesses to manage cash flow better, we think it's a terrific solution and it's proven and that's why the growth is so, so,  

Mike: and so what changed there? You said that something was genius. Was it that the previous experience was you go to website, you wanna buy a mattress? The mattress website will redirect you to some banking page, and then you apply for a credit through them. But it's like clunky. And then the, the genius part of it was that it's all in the same page and it's like, click a button and it's fast and easy. And who is kind of the, the breakthrough company for that model?  

Willie: After pay was probably, you know, after pay, after pay and cla firm would be the three that, that, you know, I, But, but for us, for, for us here in Australia, obviously having proximity to after pay, I mean, definitely the leader in creating that that amazing consumer experience.

Mike: Interesting. And it's, it's, I'm trying to wrap my head around why it's such a big deal or why it had. develop, not develop sooner. Cuz it seems like such a simple concept and something that would've been built in like 2000, you know, maybe even like web one, PayPal days or like early 2000 10, 12, 13. Was it the access to the data?

Like are are you was after? Is after pay CARNA line pay, are these companies using like cookies on sites and using more like web centric means of assessing somebody's credit? Or are they still pulling like hard credit pulls to. Make those calls  

Willie: Still hard credit pools. I mean, partially it'll be some with, with more availability of data, with easier kind of access to mobile downloads and or app downloads and so forth is, I guess, paved the way.

I think it was they stumbled upon it. Some, some in, in many ways. I feel like if you, if you track back five or seven years and were asking merchants all around the world, is there anything broken? They probably would've said, Hey, credit cards have been working for 40 years. Nothing's wrong with that. So it did take someone to come, which in many ways is a precursor.

What we're seeing in embedded finance solutions right now across every sector is, is it took someone like an Afterpay to come around and go, Guys, I'm gonna totally disrupt this. What is the accepted consumer experience norm? And create something that's new and now all of a sudden every retail bank around the world is like, Oh shit, I've got a part in the France. I've gotta, I've gotta go and build new experiences.  

Mike: Why would a retail bank, so retail bank meaning like a, why would a retail bank need to do anything?  

Willie: I think that the, the, the retail, Well, there's a couple of things. One is the, the credit card issuing businesses. I mean, there's a reason why card schemes and this is all public.

And they've, and they you know, MasterCard and Visa doing some smart things around evolving how younger consumers are thinking about and using credit cards. And part of that is about is, is a recognition that by now pay later. And the experiences that the after pay climbers and firms have created is, is kind of shifting the way younger customers are, are, are thinking about consumer credit into the future.

And so they too have programs are trying to take advantage of this and transitioning from what was. A credit card experience into a mobile wallet experience, right? So every I, I guess everyone is, is reacting to that. And so retail banks and for the same reason as they think about what will happen to credit card issuing businesses as, as part of their, as part of their business.

They've gotta, they've gotta evolve to build some, build some .  

Mike: They're, they're the really, the ones that feel the pinch as by now pay later, market grows, credit cards decline. It's like roughly, I mean, it's probably zero sum, close to zero sum. I mean, maybe somebody's buying something that they wouldn't otherwise, but I'm sure it happens on the fringes.

But majority is like moving cap moving transactions from credit card networks to buy now, pay later. And what prevents is this, Tell me if this is happening now. Are people paying off credit cards using buy now, pay later? Does it make sense to do that?  

Willie: No. No. It would work the other way. So folks are using credit cards to pay off buy now pay later as an example. Cause it's still running on all of the, the kind of historical payment rails, right? So the credit card becomes a way of funding the, by now pay. Installment scheme.  

Mike: Oh, and what happens if, I'm not sure if this varies by company in the space, but what happens if somebody doesn't pay the installment?

Like they miss a monthly payment. Is there just with a credit card, you don't pay and then they attach a fee onto the, you know, the late payment Is the same sort of structure applied here?  

Willie: Yeah. Varies from, varies from operator to operator on the consumer facing side. But would, you know, typically would involve fees. Fees and interest.

Mike: Yeah. So similar to a credit card in that sense? Correct. Gotta pay on time, otherwise pay penalty. And then I assume that it's the, the end road here looks the same too. Like if I don't pay my credit card, I rack up $30,000 on it and then I just stop paying it. The credit card company is gonna go to the bank.

Who's gonna go to. You know, executive branch and they're gonna come knocking on my door eventually. I would assume that's the, the case is that also like people, at least in the US I think associate bank and credit card debt with you know, something you just have to pay off. Otherwise you declare bankruptcy unless you're like student loan debt category.

But many times in companies it'll be a personal investment. So like if you know, if I'm investing in a company and the company doesn't pay me back, well, I just lose. Is the, is the debt that the buy now pay later companies are issuing? Is that is the debt, is the debt that the consumers hold? Is that if they fail on that, is that what's the right way, What's the right way to say this?

Like enforceable by law versus just the loss in the books by the companies.  

Willie: Depends on the jurisdiction, Mike. So I, and we'll vary a little bit from country to country. I think that general statement is that is that yes, it will sit on someone's credit file if you, as it would any other loan. And that's part of the, part of the challenge of, of around regulation is helping consumers to better understand that it is, you know, that they are taking up finance and so that there's a ramification if you don't pay it.

And so that, that will be some of the change. And it's been called out in the states in the UK and probably, I would say most likely in Australia in the coming weeks or months. And so there'll be some regulatory change over the next, over the next 12, 18 months.  

Mike: Yeah. One more thing I wanted to ask you. You mentioned earlier that's 62 days, that's the amount that's the duration of the loan.

Expiration maximum is that right?

Willie: In Australia, and it works similarly in jurisdictions around the world, is that there tends to be an exemption period that that means that it doesn't have to fall into regulated credit. And so therefore, the requirements around affordability or serviceability and credit checking and so forth have, have been have been a bit easier.

So, to your point around creating an experience around the genius was that if you could take advantage, maybe that's not quite the right word, but use the exemption to create a more streamlined way to be able to access access that the, the by now pay later lending then it, it could happen. Right. So, and hence that that loophole, if you like, around the, the exemption dates and then the products that are built within that, that may or may not in different markets around the world, be it still fit for purpose for what it looks like now.

Because, you know, when that was created, no one had thought of this thing called Buy Now Pay later.  

Mike: And do you think regulations maybe in Australia, but I, I'm sure, or I'm getting the sense that they're similar in the States and Europe. Is there too much regulation or not enough?  

Willie: I would say there's probably not. I mean specifically within the B pay leader sector as it stands right now, there's probably not enough is my personal view on it. You, we. But there has been incredible innovation as a result and a, and a highly competitive landscape. You know, if you're, if, if and this is my personal perspective, if, if it was Overregulated, there is no way a company like Afterpay could have built $30 billion worth of value and, you know, created what they did as a global, as a global gorilla.

It would've just fallen directly into the hands of traditional consumer finance companies. And so so from that perspective, it's been good that it's an enabled real innovation in the space. So I, you know, I would hate to see that regulators around the world came down so hard that then there was no opportunity to go and create new experiences anymore.

Mike: And so you think there should be more regulation? Is that to say all the growth and innovation that's happened is somehow taking a toll? Or why do you think more is somehow better?  

Willie: I think my, I think more in terms of, and I think, you know, the concept of responsible lending and getting the you know, helping the industry to get the right balance between growth at all costs versus protecting consumers.

And cuz you know, broadly speaking at this kind of microlending level for consumers is, you know, banks do it really well. There's a reason why they don't do a lot of microlending, right? Because it's expensive and troublesome and you know, so on and so forth. But then on the flip side, you don't want people to just kind of be handing money out to anybody.

And that's not what I'm stressing that, that organizations are doing. But you know, if you, some of the things, Mike, that you guys have been talking about with open banking and availability of data means we can do smarter cash flow analysis, like things to just help the consumer so they're not kind of, you know, riddled with seven different types of debt and not understanding it.

Right. So to me, getting some rules in place around the minimum checks and then using technology to automate that and make smarter decisions to me would be good for, or, you know, a loan origination in any context,

Mike: I think. Mm, yeah. I tend to feel, I tend to have a stance like personally on this, that by default no regulation is best.

And then regulation, if there's a consistent pattern of the free market failing to solve a problem. And in this case, it seems like if you're a private company, you're line pay, you're client, you, your buy now pay later company, you go raise money. You have both operating capital to like build the product to run the business, but then you have loan money that you're gonna use to pay the merchants and then loans that you need to collect for consumers.

If you lo, if you give more mer money to merchants, then you're able to collect from pa, from consumers. You run at a loss and the loss isn't going to be shocking. It's not like, you know, an earthquake is gonna hit and you're an insurance company and you insure all the companies down in Los Angeles or all the, you know, buildings, and then all of a sudden you're, you're out that, you know, massive expenditure.

It's probably gonna more look like a slow drip where you're like, okay, this demographic of people is consistently not paying back, or they're slow. And so I would, I would intuitively think that zero regulation is best, like whatever the 62 day window is like, maybe there's a, you know, a whole undiscovered market of super long loans, like 30 year loans to buy a mattress.

And maybe that's like, you know, beneficial to some people. And I, I just would, I'd be curious to hear your elaboration on where, why the government has a unique role to play in this market at all.  

Willie: It's, it's really interesting. There's a couple of things actually. Yeah. Just unpack that. One is, is a, the is, is the, is the LA say fair capitalist market in and of itself going to work here? You know, given the kind of macro economic situation that everyone's in, maybe it may well be that cuz some of those operators that you've named, they are losing money handover fist. They have taken incredible writedowns in valuation as an example.

They can't continue to move from funding milestone to funding milestone losing and burning cash at the rate they have. So inevitably they do have to tighten the screws and tighten the screws Right. Rates. Right. You know, you're kind of, that, that like that will that work in and of itself? Maybe. Maybe.  

Mike: But how can I push back on that a little bit?

So if they, yeah, if they're losing money, they would make cuts to their, you know, employee count or operating expenses and then they would raise the rates. But that seems like something that if it doesn't work, you're not, you're not out the merchants cuz Right. You have to pay the merchants up front. So Like, like, yeah.

Maybe continue on with that. So I, I. Yeah, so,  

Willie: you know, it's part, you know, we, we look at 'em and, and you know, a lot of, a lot has been written about the capital markets have, have been quite scathing in the way they're valuing businesses in this space specifically. And, and, and a lot of it is, is the fact that the that the business model, not the product, but the business model then, then I'll bring it back to where government could potentially or should potentially get involved is, is that the, is that the product is not the problem.

The business model's a problem, to your point. There's default rates, there's the cost of capital, there's the cost to acquire customers. Like all of these challenges that are weighing on, you know, the big global guys operating in that consumer facing pace space, I should say. And they and, and they, to your point that some you know, they, they will have to reduce cost in order to chase down profitability or at least some, you know, line of sight on profitability at some point.

The merchants are very unlikely. . You know, you think about traditional e-commerce merchants right now who might be paying somewhere between, let's say on average 300 Bs to 500 Bs for the privilege of mm-hmm. , Mike and Willie bringing this by now per customer. There's not many merchants in this environment who are gonna turn up and go, Oh, Mike, your cost of capital went up.

So I'm happy to absorb an extra a hundred bibs or 200 bibs. So, I mean, a lot of these guys are working on 10, 12% EBITDA margin, right? So they don't have for 4% hand to you, right? Cause that there's a cost each of that, the merchant's funding that. So then you've got downward pricing pressure, cost pressure from your merchants, and then you've got downward pressure or upwards pressure on the cost of capital.

And these two things, I mean, I think it sets up what will, what I think is gonna happen in the industry over the next two or three years is that, quite frankly, the most sophisticated. Consumer and business financing companies who happen to be the biggest retail banks in the world, I think they win Mike cuz they've got the customer.

Then I have to acquire Mike. They, their, their lending cost to Mike is cheaper than everybody else, and they're damn sophisticated at managing to defaults in a regulated environment. So it's kind of setting up. Then you ask the que then it comes back to the question, well should, if that's just the way it's gonna play out, does the government need to get involved from a regulation standpoint, either to protect businesses and or consumers or to make sure that there is space for everyone to play and innovate still?

Right. And my view is, is it is very nascent. But all of these new, all of these new financing slash payment experiences, I think, you know, the, the, the government needs to, needs to at least make sure the consumers know exactly what they're signing up for and or small and or businesses for that, for that matter.

Mike: And do you think there's insufficient information dissemination currently from customer to merchant?  

Willie: Well, I mean, I think the short answer would to, that would be no. Cuz everyone's got a link to a tease and sees page, which, which is, you know, seven pages long, right? So it's not that, it's, it's probably more broader awareness at, at the top of the funnel as opposed to detailed information tees and sees, cuz there's plenty of that stuff around.

Mike: Mm-hmm. . And, and do you see there being a possible scenario where a lot of people get burned somehow? Like I'm thinking about the recent in May of. This year and crypto, there was a large centralized exchange called Celsius and a number of other like collateral damage. And, and it's like a lot of people had their money in these accounts and then the whole, the whole house of cards falls and now everyone's out all their money.

That's like worst case scenario. But here it seems like worst case scenario would be what? Buy now, pay later. Companies struggle to make it work and then some Is there,

Willie: Mike is then it's not free anymore.  

Mike: Right, Right, right, right, right.  

Willie: Like, Hey guys, actually. Yeah. I look, I'm prob no is the answer. Yeah, no.

Cause it was a market, it was a market share play. So everyone's like, Hey, you know, like 12, 8, 24 months ago, and you've been through this so many times in your career, right? Is is it when it's, when, when, when the sun is shining, everyone's like, Hey, grow, grow, grow, care about his share. And so at that point people are like, Hey, just give the product for free.

Mm-hmm. . And then what will happen is if, you know, as the world gets tighter and harder and cost of capital goes up, is that maybe consumers will wake up one day and or businesses will wake up one day and go, Oh, there's a fee attached to this and it's, and it's fair. And they'll go, Oh, oh goodness.  

Mike: Cause right now merchants pay two and a half percent for credit cards. So they're used to charging two and a half percent higher on all the products they sell to account for that additional expense. It's all baked in. Right. I would imagine that just feels like the inevitable. process here. Like you paying cap, maybe you're paying cash or you pay debit transaction electronically, crypto transaction, Like you save 3% on your transaction.

But if you want this convenience of a credit card or buy not pay layer is less. Yeah. Well I guess the pushback would be in conversion rates go up, like you're gonna sell more couches if you allow people to use a credit card or buy now, pay later. And so you make up, you make up the transaction fee and the additional volume  

Willie: A hundred percent. And that's the way, you know, that's then that's why merchants or all around the world have, have, have been, you know, some would be more begrudging than others, but most merchants, broadly across all sectors have been like, Oh, well I'll, I'll absorb it because the incrementality of it has been significant.

Mike: And what do you, what's your rough guess or what do you see in the numbers as far as the increase on those transactions? I, Is it like a. 2% bump. I mean, I'm sure there's variation, but you'd agree there is a bump. Yeah.  

Willie: Yeah, there's definitely a bump. I mean, I just, the broad cuz it varies so much from sector to sector.

What I will say is that the bump almost always outweighs the cost implication, you know, and that's why it's grown at its level. Cuz quite frankly, if it didn't then, you know, the, the, If I were to take away B npo, company X from my checkout, which by the way, Mike, and, and for, for the audience here, I mean, if next time you're buying anything online, just check out the checkout, what we call the checkout spaghetti on any given website.

Right? Here's my option, I've got 400 different payment. I mean this is just, I mean it's just ludicrous and I think that has to change. Yeah. And so in some ways consolidation, you know, coming back to this point is that consolidating the options is going to mean less options means. More scale, which hypothetically will mean kind of lower cost potentially for a merchant and or consumers and small businesses kind of going okay, to access that capability, I'm willing to pay some money for it and see, you know, that's gotta be the path to profitability for this part of the sector anyway.

Mike: What were you, tell me about what you were doing.

Willie: So I've been, I've been in sort of B2B technology for the last 20 years and have oscillated between startup and big corporate. So in, in startup, I, I, in fact, one of our co-founders, Josh Eaters in Lepe, he and I were co-founders in a in an adtech business, which back, way back in 2010 is interesting correlations between what happened in adtech over the last 20 years and what's happening in FinTech today.

But we, yeah, we added data and Ana what was principally a data and analytics business, which we sold to some guys in San Francisco and. Spent some time in the us. I've ran Yahoo Search and it's advertising Yahoo Inc's advertising businesses in, in Australia for, for a few years. And so have, and then most recently was with WPP and ran mediacom, which was you know, a big, a big communications advertising agency.

So I've, you know, very eclectic set of experiences.  

Mike: I guess, what's the current theme or general trajectory in online advertising?  

Willie: Interesting. I, I think that data is getting harder to come by, right? And data was costing businesses a lot of money to acquire, but it would get you you know, would get you more efficiency and, and, you know, most online advertising, particularly in the big end of town, is optimized within an inch of its life.

And one of the things that was really interesting and appealing for me is I joined the Board of Loan Pay back in 2020, was the fact that the payments ecosystem and what the banking and finance industry have in terms of data and online advertising, these two things are like completely disconnected. But there's massive value to be had both ways, right?

And so you know, I guess part of, part of my vision for what FinTech as an industry will see over the next little bit is we can help solve some of those challenges that online advertising is. Is seeing in a respectful way that is in, that is compliant but also, you know, helps to, no worries, helps to helps to you know, helps online advertisers to get more value out of, out of their, their investment.

Mike: And where, where, where was Limepay when you went from being on the board to joining the company? And where is it now, I guess, in terms of employees or revenue or money raised or however you keep track of it?  

Willie: Yeah, so, so in total, in total we've raised just north of $31 million to date. Mike, the, I joined after our last big raise, which was which was in, in the middle middle part of 2020.

And we've grown to be just shy of 40 head count right now, mostly domiciled in Australia with some presence in in, in Asia. And. In 20. In, in 2020, we, in terms of ttv, we will have run less than $40 million through the platform. This year will be this year. We'll on track to do something like a quarter of a billion dollars.

And, but the other important thing for us is we've also made a significant strategic pivot, right? So Mike, all of those things that I spoke about, those challenges in the sector around by now, pay later. You know, we've sort of said our thesis is installment payments will be real will continue to be real.

It will. We believe that b2b installments and cash flow management in B2B is going to be more interesting, I think about my credit card usage in businesses in the states. The fact that 40% of businesses 40% of payments or something like that, crazy in the states are still made with checks is it's in like, amazing and I'm amazing stat.

It's gonna 0, 4, 0 or something of that ilk. I'm sure it's dropping every single day now. But digital, like there's a digital revolution coming to business in in, in America. And a lot of that is going to be about embedded finance experiences. You know, businesses waking up and you see this with things like zero in accounting, right?

There's a digitization of that. How they move their money, how they get access to money. Like all of this, all of this stuff. We, you know, so we've pivoted and taken our platform to make it easier for banks and fis to build experiences for those customers.  

Mike: And so you mentioned 40 to 250 million is the what?

Year over year change.  

Willie: It's a thousands and thousands of, of, percent of that's, it's a very young business.  

Mike: Yeah. Well, still, I mean, 250 million it feels like that's high. Is. Coming from large transaction, Is it like a 250 million? So average transaction size is north of a thousand or less.  

Willie: Yeah. No. Yeah.

Some, something, something of that in, in that sort of range. And you know, I guess it's still relatively, I mean very very transparently. And the payments game is still, you know, a, a tiny, a tiny drop in the ocean, right? In what is trillions and trillions and trillions of dollars. So, you know, we're proud of what we've done just to prove out the platform.

But quite frankly, for us, it's not so much about ttv and what runs through the pipes and more about deployment of the technology, pla because, you know, ultimately now we see ourselves as an enterprise SaaS business, right? As opposed to a payments transaction business. And that's where we think value will value creation and growth will lie for us over the coming years.

Mike: Enterprise SaaS, enterprise SaaS business as opposed to a straight. So the idea being you're now going to B to. As opposed to selling a tool directly to a merchant.  

Willie: Yep. Hundred percent. A hundred percent it.  

Mike: Yeah, that makes more sense. Interesting. I, I'm curious to loop back a little bit on the advertising, if your game of course it seems like the majority of online advertising has been through search and social with Facebook and Instagram and Google search accounting for majority of it.

TikTok obviously changes. The game for social search is, you know, still majority through Google, but I don't know how long that'll be. Do you feel like things are changing quickly? Like, do you see any tension with the fact. TikTok is Chinese owned, and China has like clearly and overtly col, you know, the, the government is like openly saying, We're, we're gonna access the backend data of all these companies, or at least have the right to.

And then TikTok is wildly successful throughout the world. Is this like going to become a major source of tension throughout the world that you anticipate? Because it's gonna drive a lot of advertising revenue. It's just like the flywheel is just faster and faster and faster. And it's you know, I'm seeing it, I'm seeing people say like, Oh, don't post on Instagram anymore.

Posts on TikTok. And I've seen the show before because this is what happened when people, you know, moved from Facebook to Instagram. It was like all of a sudden, you know, Facebook buys Instagram and they say they're gonna double down Instagram, and they're like, this app really? But they see the data. You know, once you see the trends behind the scenes, you're like, Oh yeah, that's the way it's gonna go.

And it seems like it's going to TikTok, which is just optimized for maximum bandwidth. throughput. It's just, you know, faster. And so Instagram spins up reels, which is a similar type of user interface, but it's slow. It's like they're behind the eight ball and it, I don't know if you have it. What's your sort of take on this?

Because it, it's interesting cuz it's involved in so many different areas.  

Willie: Well, I'm, you know, I've, I've lived in the online and digital advertising ecosystem long enough. My two have seen like a bunch of different cycles. Right. And so what you're seeing with TikTok now, is it real? Is it legit? It is.

And has the US government made some very remember Trump and the concerns around ownership and what's happening with TikTok in order to make it, you know, to make, to allow them to operate around the world. It's, it, you know, that's, that's not new. You. Well, folks in the industry will, will be very aware that in in China there's no, there's no Facebook, there's no Google for the same reasons, right?

Worried about kind of being able to siphon us companies being able to siphon data out on the back end to use for whatever purposes, right? But, so I think that's, that paradigm is also not new. But you think about Snap and where, and where Snapchat was at, right? A few years ago before TikTok existed.

And we, we do see this kind of trend of, you know, new platforms that will come back and the question is what's gonna stick? And actually that cycle's probably like a five to seven year cycle. And overall advertising dollars is, is not, this is not changing. In fact, in a recession it's gonna go down, right?

And it will go to the places that, that, quite frankly have the best measurement capability. And so the question for me is whether or not it comes out of things like online. So you know that Netflix is launching an ad funding model? No. You know, so , you know, a lot of these guys are all like, Hey man, we've gotta, we've gotta monetize our content in a slightly different way.

So you're, you're gonna get a lot more of, you know, that there's Disney, there's, you know, what cable TV's doing and all of their platforms and video on demand. So, What was TV Money is going to translate into online video. Who's gonna win that? Is TikTok gonna big, take a big chunk? They already are. And then, you know, who gets the big chunks and then who's kind of playing around the periphery.

So, and you, for you guys as a content producer, as an example, how do you get access to that money out on a, on a you know, how, how do you find. How do you, how, how do you get the money at that would otherwise have gone out to say say a radio station and or to Spotify, you know, how do you guys as individual content creators get access to some of that higher up the funnel? Like, these are the types of things that people need to be  

Mike: thinking. Yeah, I've heard it described I think biology had a take on this, that the social networks are in the early stages of communistic business models, where it's like Twitter, you get 0% of the value. You create YouTube, you get like, you know, some handouts that is like, good enough to survive.

Facebook, you get nothing. Instagram, you get nothing. And if, if any of these platforms wanna shut you down and take everything you've owned, everything you've ever made, they'll do it tomorrow and you say the wrong thing and they'll shut you down and take all your value down in, in your debt. And so I think this creates a massive amount of pressure to change the underlying.

Structure of property ownership to move it more decentralized. And the tools are now available, like we can build these decentralized like, you know, cryptocurrency keys that have access to your accounts. So I think that will be the thing that comes after TikTok will be the, like, we'll move to a place and maybe Twitter integrates it because Elon is, you know, pro innovation and blockchain and everything else.

So maybe they move towards that and they open source everything in the open source, the algorithm. But un unless that happens, like as long as these are like closed garden, you know, a hundred percent owned, centralized, they'll shut you down if you say the wrong thing. Like, you know, particularly I think like TikTok in like many of the large tech companies in social, Very woke.

And you say the, they lean heavily left. And I, I don't know if anyone would debate that TikTok is also like leaning left, but they have now the influence of China. So it's like you criticize anything about China on TikTok, they shut you down or they put you at a blacklist or something. Who, who I don't know.

But they can, and given enough pressure, they will. So I think people realize that and say, Well, we don't even want these companies to have the ability to do that, nor do we need them to. And then post TikTok is like decentralized TikTok. So I think, yeah, when that happens, it doesn't mean you can't advertise.

I mean, I don't know how advertising looks but it probably looks like opt in. You know, like by default everything's encrypted into private. But I like better ads. I'd rather have a good ad than a shitty ad. So I'll give you my information, I'll tell you how old I am, tell you what I'm interested in, why not, But I'd, I'd rather have it be known what I'm.

Divulging so that I can get good advertising. Like I, you probably would appreciate this, but I think great advertising is fantastic. Like I want to learn what the great pair of men's jeans are so that I can buy 'em as opposed to have to go and Google around and search for it proactively. So that's my thought is like just make, advertise, make the data private by default, encrypted and you own the keys and you opt into the data that you divulge and in return you get good at and you can like have total control of that.

It seems like, in my opinion, GDPR is like a total flop, total failure because every website, now I gotta click the cookie thing and I don't know what it means. And like nothing actually changed except for just the massive transaction tax of the whole internet to click that. I dunno if you have any Yeah.

Willie: Reaction to that, man. That's it. You have opened up a whole can of worms there, but it's, you know, I think you're, I think you're right. I think the other, the small build on it that I would add to the perspective is that is how the money flows, right? And you bring it back to like the FinTech financial services ecosystem as an example.

But in the advertising ecosystem, the money flows from the brand and the brand is either buying it themselves or they've got an agency. If I'm looking for Mike Townsend and his podcast and that particular audience with the particular flavor of content, it's actually hard to find. And so the big platforms are able, the big platforms can centralize this and make it so, YouTubers an example is an easy way to spend your money cuz they've got all of the capability around helping you to find where Mike and Willie are at.

And so if you democratize it, and I love the idea. Handing back the keys to a consumer helping them to understand and they've got some way to be able to you know, get, get proportionate value in that value exchange. I'm giving you my data to use your example, because I want 10% off that sip sexy pair of jeans as perfect for me.

I think I would be, and I would, I would say that 80%, maybe more consumers would be like, That's totally cool. I'm happy to do that. Then the question is, on the other side, if the content itself becomes fragmented, who's going to, Is it, is it one organization that goes, Oh, there's all this, all this fragmented com fragmented, that's we fragmented content.

We've got this communistic business model around it. Let's call it for, for instance, for arguments, say communist.ad, right? Mm-hmm. . And so communist.ad goes and centralizes all of this stuff and before you know it, they'd look just like TikTok or Facebook or whatever cuz they're like, I'm giving you one pathway to buy.

I give you all the tools, I set the price and then I then it's, yes, it's made out of, it's Willie and Mike and they all get a slice of the pie for, and in terms of content producers, but I'm still holding all of the keys cuz the way the money flows is me as the ad buyer. I can't Oh right. Go and disperse that into a million different buys.

I can still only do five buys. So then one of those buys is, happens to be aggregating all of the communist dot a stuff, communistic dot a I think that'll be a bit less challenging for people.  

Mike: Well is that at the, because to me it seems like the, the, the fault in the structure is that these social media companies have the ability to close your account and shut you down at any given point.

And they also have the ability to set rates in the market, meaning rates to advertisers. And they may give you 0% of that. Or in YouTube's case, I think they give you like, 30%, but either way, it's completely up to them. Now I could see a scenario where if this was decentralized, that agreement, that pricing structure can be open sourced and decentralized, such that no one could change it.

So it's like I go on to, you know, decentralized Twitter and it's like, well, I get 50% of all advertising revenue and then 50% goes into the network, which then funds development of the network and like, no one can change that. It's just part of the, the source code. And that way I would maybe, I mean maybe it's like Twitter and then decentralized Twitter and decentralized, you know, next social media app aggregate data together.

If, if you allow that, but you as the user, you'd have permission to say, How far am I willing to let my data be anonymized and go outside the network. Maybe you get a, a boost in that. You get some like, Percentage share Brave Chrome, like a Brave is a chromium browser company. And, and they built this in the browser natively.

So the whole idea was instead of going from brand to publisher, you would go, I wanna make sure I get these words right. Brave allows you to go directly to Brave as the aggregated ad platform, and then buy their cryptocurrency, b a t, basic attention tokens, and then use that to distribute your ad on the internet.

And then me, as a consumer who's just surfing around, I get a percentage of what I'm viewing. So I can, I can click the button to, I turn off ads, or I can click turn it on, and then I get a percentage of what I'm what the advertisers are paying, which is like, it's a cool, it just wouldn't have been possible before without the technology.

Willie: Hmm. It's super, super interesting. I think it very nascent. Yeah. But but, but definitely where it goes over time, because it's,  

Mike: my, my thought is like there's, whether it's advertising or payments, it seems to me like the, the distribution of returns is flattening. So where you had massive consolidation around Google or Facebook, now that's becoming flattened.

And so members of the community, the users are being compensated and incentivized and you start to see that in the fringes with like YouTube doing the ad share. Well, I think they'll all have to do this eventually where they're actually distributing revenue from the centralized organization down to the members who are creating value.

And I would imagine, you know, similar in payments, like you have visa master. Who take an enormous transaction fee and they go and buy mansions, but they're not relative to the new payment structure potential. With decentralization, you could spread that like a validation mechanism across many different people and have it be decentralized.

And I, I would imagine, I mean, tell you if you disagree, but Visa, MasterCard, how do they survive? How do they, I mean, how do they pivot to, you know, play the long game, but how do they survive like decentralized currency transactions?  

Willie: That's, that's really interesting. Well, I think that my, my having now played in both the ecosystems a bit is that, what I'd say is that the rail, the underlying rails of what happens in the financial services industry, much harder to deconstruct and disrupt.

Right, Right, right. In the, in the advertising con, you know, if you're a publisher, , your ability to access the flow of funds and the advertising payment rails. Like you can create new stuff. Mm-hmm. like you can do it tomorrow. Mm-hmm. , right? It just, you, you know, do you have enough capital to muscle in on that and kind of get in front of ad bios and through technology or people.

And so the barrier itself is, it's not, it's not the same as the ironclad barriers when, when you think about a MasterCard or a Visa and so much of the way money moves around the world right now is, you know, goes on those rails. So you can't turn up and go, I'm just gonna build new rails and, and and disrupt this.

And that's hard. The bit that, you know, we ourselves as a, as, as, as a business are very focused on is what is. What is the, what is the embedded finance experience though? The new types of experiences? Now, going back to the beginning of our conversation where Afterpay created this thing, which kind of didn't really exist in a little bit of a loophole, and all of a sudden it was worth $30 billion.

Like, because it just delighted consumers. Mm-hmm. . And so if you can do that in a bit B world or in a B2C world, can you then is the battle, it's not really so much a battle for the rails, it's a battle for customer ownership is what we're seeing right now. And so and so would they disperse that? I don't know, Mike.

I mean, the biggest scariest when you, when you talk to banks all around the world, who are they most afraid of right now? Apple.  

Mike: Really?  

Willie: Google? Yeah. Oh, with Apple Pay Google. Yeah. Cuz they own the, Cuz they own the customer. Yeah. And if you own the customer, if they own the customer, they turn around, they go, Oh, Mike, actually, you know what I might do is I was, I was helping you payment, do payment processing over here and.

For fast forward to 2032. Now I'm doing home loans. Oh, by the way, I can give you a credit card. Oh, I'll, I've, I can be your crypto wallet. All of a sudden you are kind of losing relevancy in that conversation, right? Mm-hmm. So that's, you know, it's no different to on the app publisher side, people kind of going, Oh my goodness.

Who, who are these TikTok guys? And all of a sudden they're, you know, taking 10%, 20%, 30% from, you know, from, from advertiser budgets. And so, you know, banks are also thinking through what does disruption look like? There does a decentralized money movement or participation. There's gotta be a new business model.

There's no doubt about that, Mike. So how that's gonna work? I'm not, I'm not sure.  

Mike: But it's worth all, Well, it's gotta be decentralized. I mean, like, I, I have more of my savings on chain than off chain. And I do more transaction, well, I do more transactions off chain with a credit card. , but I would do them on chain if the technology was there.

So like, like let's talk about line pay. So line pay the money that you're collecting from consumers on behalf of the merchants coming from probably a ach, like some like what's that tool that connects bank accounts? I don't know. ACH transfer. You could collect money from people's crypto wallets and you could pay merchants in US dollars, which wouldn't be a mass, wouldn't be a hard change for the merchants.

You'd probably just have that as another like payment option. Now, as long as you have the identity of the person, then you could allow crypto payments and say, Well, what's the benefit of allowing crypto payments? Is there a big demand? I think the answer, this is my thought on it. Probably not in developed countries where banking infrastructure is readily available.

When, if and when hyperinflation becomes a reality for the US dollar, then all of a sudden the companies who have the crypto rails already built will be the ones who win. So today people keep their money in a bank account thinking like, Oh, the US dollar's gonna be fine, but play the story out over five, 10 plus years.

And people have majority of their capital on chain because they want the privacy of it, the security of it. They wanna own it and they want it to not be inflationary. Like we work with a lot of people down in Argentina and the vast majority of them prefer to get paid in Bitcoin. They prefer to pay in Bitcoin, They prefer to like live encrypt on chain because, you know, they're experiencing hyperinflation.

So I, I think the, the opportunity today is like off chain cuz people just feel comfortable. Oh, the US prints another 15 trillion. Oh. All the Middle East countries stop using US dollars. Global Reserve. Oh. Like Europe drops the US dollar in favor of Bitcoin as the Global Reserve. And now it's like everyone's getting out U S D and they're moving on chain.

And now they still wanna make transactions to buy couches, but they wanna pay in Bitcoin or some stablecoin. And I think, my thought is like, that's where it's going. I don't know the timing on it. Maybe two years, five years, 10 years.  

Willie: But do you think you'll be, Mike, do you think it'll be as quick as two?

Because if, if you do, then I, I, you know, we need to get our skates on in terms of product development.  

Mike: Right. No, I think the, I think the, the pressure here will largely come from people's desire to leave. It'll come from fiat flight. Like people want to get out of the, I mean, this is a predictable trend that Ray Dalio writes about, the hedge fund manager, who's now like a book writer, and he wrote about the changing world order in his book, which also is like a great YouTube video, which shows like the, the Roman Empire, the British Empire, the Dutch Empire, the American Empire, they all go through predictable mile markers on the rise, at peak and decline of their empires.

And inflation is a marker that you're past your prime. Having a wide military base, all, you know, like the Dutch and the British and the Roman and the American, we all have like a, a basis on every, every country in the world. Like we're way over distributed, way over leveraged in debt. And now you're competing.

Now you lose your your, your remote, right? Like, oh, by the way, all jobs in the whole world just went online and remote. So what does that mean? Like as of two years? . Every American company is trying to hire people abroad. And what's the reaction from the government in the United States is to like clamp down, add more regulations, add more pricing, like raise minimum wages, add all these like barriers to hire people abroad.

So now America's workers are less desirable abroad cuz it's an open market, right? It's like, okay, I don't wanna hire American workers, I hire German workers, I hire Australian workers, whatever. So I think this puts like long, long, even medium term, massive pressure on the American market. And what does the Federal Reserve do to get outta this pressure and get outta their debt?

They print more money. And that, that's when like when that happens, which is, you could argue it's already started to happen, but when it becomes like, Hey, we gotta print more money to pay off our debt, that's when everyone's like, I gotta get the hell outta here. And where do they go? I mean, bitcoin's like, come on in guys.

We got this developing growing ecosystem that's managed by math. And like, unless we get a solar flare that kills all the electronics in the world, we're gonna be around. No one's gonna take your money. You own it. And like, value propositions are 10 x. So that's my, that's my thought. I don't think it'll be two years.

I think it will probably five plus, but less than 15. And it'll just be the way that people think about it. Like, you know, you know, like prior to credit cards, I remember my grandma would just manage all her money on a checkbook and she has like, Oh, I can't handle these online payments. And, but like, there was a moment in time where, you know, in the eighties, I think it was credit cards rollout, everyone's like, You gotta get one merchants, They're like, What the heck is this?

And they, everyone gets one. And now it's just like the network just turns on and, you know, you don't use, some people use cash to pay and they, but they're like, it'll still be like that. Right? You'll still have like, Remnants of it, but the majority of the market and the excitement is, is headed in this new direction.

Willie: That's my take. Yeah. It's fascinating stuff.

Mike: Is there anything else you wanna chat about before we jump off? Either ways?  

Willie: Man, it's been such a, it's, it's been, it's so much fun to just kind of to to explore so many different things here, Mike. I feel like we could keep going for hours and hours, but you know, I think, think we'll have to find another time.

Yeah.  

Mike: Where are you? I'd ask you two things. Has there been any books you've read or blogs or YouTube videos that have been particularly inspiring or educational for you?  

Willie: Question. Look, I, I am, you know, I'm a massive Simon Sinek Oh, yeah. Supporter. You know, I, especially when you think about the pace of change in our, in our industry here talking about FinTech and advertising and so forth, and the fact that we set so many arbitrary goals for ourself that and become so short termist that we take things like crypto and it's a, it's a, it's ability to really change the world.

We're hamstring it ourselves because worried about the next quarter's results. And so I love the way Sinai kind of talks about what is you know, if you're playing an infinite game and value creation is true value creation. And sustainable growth through a talking measured in decades as opposed to next quarter, is that it really changes the way we would run our businesses and capitalize things and invest in things and help people and all of that.

So, so I guess that that is a massive inspiration to me. And also that, and also I, I particularly agree that, you know, all the technology in the world means nothing if you don't have great humans either designing or deploying said technology. And so you know, I always, I have always been a big believer that, that people have gotta come first and see that mistake made all the time.

And, you know, you look at. What Wall Street, how Wall Street views the world. And and you kind of go, wow. There's, there's they think that people in results and success are mutually exclusive, but the, but it's not, it's not. So, you know, especially in this world right now where the world is so, so afraid and so nervous about what's happening over the next 12, 24, 36 months in the equity capital markets you know, now's the time actually to buck that trend and invest in people and people will get us through.

Mike: Would you say you're fearful of the general macroeconomic direction?  

Willie: I don't think fearful, fearful is probably not the right you know, is not the right way. Not, not how I would articulate it for myself. I think I'm wary of weary and, and slightly anxious about what the implications will be like for us and our, our business and our people.

But I'm also old enough to have lived through, you know, the.com boom two decades ago and then 2008 of course, and realize that man, you know, things will come good. Mm-hmm. , it's just a question of whether it's gonna be five years or 10 years or 15 years and you knows, gotta take a sense of optimism into that.

Mike: And, and, and do you feel like like China, Ukraine, Russia, war, and the general like economic backlash from the pandemic, are those the like three major sources of economic concern, would you say?  

Willie: A hundred percent. I mean, and well, I think the supply, you know, my broad observation is that supply and supply chain issues all around the world, that's going to get better right in the next 12 months.

If you look at the cost of shipping as an example, containers, that's almost back to pre covid levels. So the ability to move stuff around the world is going to get better. China fingers cross relaxing some of their zero covid policy that will make it better. Again, manufacturing. So, so I'm, you know, I think the supply thing is gonna fix itself over the next little while.

War is, and we definitely don't have enough time for this today, but I'm somewhat of a realist in that, you know, I think that war will come, and that might be a little bit controversial, but war will come. And the question is when. In many ways, it's already being fought right now. Some of it is above ground with missiles and some of it is on the internet and in and in and in technology infrastructure.

Right? And some of it's in the capital market, so that's not gonna go away soon. And how it pay plays out, I think is gonna have a material impact on, you know, what you describe the American the Great American dynasty. Yeah.  

Mike: Yeah. I saw the rate, I saw these stats recently that was like the rate at which China's capable of producing physical goods and infrastructure is roughly in the order of like 200 times that of the United States.

And they measured this by shipping container volume by year. It's like, I forget the exact numbers, but I think United States is like 70 million cubic feet, and China's like, like in the 400 million, like they're, they're just like astronomically higher. And it seems like that advantage of physical, like in the physical world, China's just gonna win.

I mean, they're capable of producing, they produce all the world's goods for roughly speaking. And I just, I think to go into a head-to-head war, I just hope to God that doesn't happen between us and China on like an overt hot war. That would just be, that be worst case scenario . And something that it should be like, number one political agenda is to avoid that.

Like you can fight a culture war. Culture war, that's fine. You fight that one. Digital war, you know, I take your cryptocurrency sucks, but at least like nuclear bombs are just a whole new level. But yeah, I think a realist attitude is the right one because on if you're on either side, if you're just, you know, heading the sand ostrich thinking things gonna be great, like obvious negative externalities from that perspective.

Possibly even worse than if you're overly pessimistic. But important things to talk about. Nonetheless, I hope they're not, you know, I hope they become less, I hope they become easier to talk about and the general temperature of these topics decrease. And I think they decrease more with familiarity in having these conversations.

So that's why I always try to bring up the most difficult conversations to have with my guests. So, Willie, thanks so much, man. This was a blast. Great. I really appreciate you having you on.  

Willie: Thanks, Mike. It's been fun.  

Mike: All right. Take care.  

Willie: Take care.